Secret Prices, Genius rates: OTA loyalty offerings gain traction

Josh Belkin, Hotels.com's vice president and general
manager for North America, says offering exclusive pricing to loyalty
program members is a win for all parties involved.

Customers get better prices. Suppliers who agree to lower
rates get hotel listings that stand out more thanks to a large purple banner
designating their Secret Price, as Hotels.com has dubbed it. And Hotels.com
sees loyal customers who come back more and more.

"It's a virtuous cycle," Belkin said. "They
keep coming back because they like our loyalty program, they like working with
us and they continue to see a lot of really good-quality hotels at great
prices, and it just keeps reinforcing itself."

Hotels.com first began heavily marketing its Secret Prices
in May 2015, Belkin said. The prices, hidden from the public and search sites,
can be accessed by becoming a member of Hotels.com's loyalty program, which is
free, signing up for its newsletter or using the company's mobile app.

Secret Prices is part of a larger trend of members-only
pricing from OTAs, which Belkin said started gaining traction 18 to 24 months
ago.

Before then, OTAs offered discounted pricing in a variety of
ways. For example, Hotels.com sent email-exclusive discounts for lodging,
Belkin said.

Some other Expedia Inc. brands did the same, according to
Daniel Reed, vice president of global merchandising. Reed's team is responsible
for the Expedia, Orbitz, Wotif, Travelocity and CheapTickets brands.

Members-only deals for Expedia loyalty members began with
lodging in April 2015. Today, the OTA offers member-only deals on
accommodations, car rentals and, most recently, activities. Reed said
discounting started with mobile-exclusive deals, newsletter deals and in-app
deals.

"We brought all of that together and found that
offering something special to our members within Expedia, specifically value
around pricing, was something that really resonated with our consumers as well
as our suppliers," Reed said of members-only deals.

OTAs outside of the Expedia family also offer members-only
exclusives. For example, Booking.com, a Priceline Group brand, offers Genius
rates at properties around the world. A spokesperson said users are invited
into the free Booking Genius program based on their volume of bookings (five
will qualify). The program then gives them discounted lodging rates, a separate
customer service phone line and perks like late checkout priority.

Belkin said he believes members-only deals gained traction
among OTAs because they enable brands to enhance their loyalty propositions.

For example, Hotels.com offers a deal whereby customers who
stay 10 nights at accommodations booked on the site get one night free. But for
some less frequent travelers, that amount of nights can be a commitment before
seeing a reward.

"What we heard is, 'How can you reward me instantly?' 'How
can I get more instant gratification?'" Belkin said. The concept of Secret
Prices, therefore, "was really born of finding a way to get people instant
savings, right now, from your very first booking, yet still be able to earn
credit toward those 10 nights and getting one free.

"So it's a little bit of double-dipping; it's getting
something now, and it's getting something later, and that one-two punch really
showed itself in our customer feedback as something they were craving. We were
able to deliver on it."

Reed said members-only deals have helped Expedia understand
its customers better by attracting them first with discounted pricing.

"It's created an ecosystem that allows us to better
understand the needs of our consumer, because they do provide their email
address," Reed said. "We can then ensure that ... as they interact
with our site, we can understand their needs in a much better way and create
more relevant offers back to them."

In the two years since Hotels.com's Secret Prices have been
available, around 70,000 accommodation providers at some point have offered a
Secret Price out of Hotels.com's inventory of 300,000. They have the option to
plug in and out of the program when they want, Belkin said, so they can use it
to fill rooms during slower times.

While Belkin declined to state how many Secret Prices are
available at any one time, he said they are offered by hotels around the world,
and Hotels.com has no intention of capping their availability.

"We think it's good for the supplier, it's good for the
customer, so we'll always try and just get the best value on the shelf as we
can," he said.